<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Period Ended JUNE 1, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From_____________ to _____________
COMMISSION FILE NUMBER 1-8546
SYMS CORP
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-2465228
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
SYMS WAY, SECAUCUS, NEW JERSEY 07094
(Address of principal executive offices) (Zip Code)
(201) 902-9600
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __
At July 3, 1996, the latest practicable date, there were 17,694,015
shares outstanding of Common Stock, par value $0.05 per share.
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--------------------------
SYMS CORP AND SUBSIDIARIES
--------------------------
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of
June 1, 1996, March 2, 1996 and May 27, 1995 1
Condensed Consolidated Statements of Income for the
Thirteen Weeks Ended June 1, 1996 and May 27, 1995 2
Condensed Consolidated Statements of Cash Flows for the
Thirteen Weeks Ended June 1, 1996 and May 27, 1995 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 5-6
PART II. OTHER INFORMATION 7
Item 1. Legal Proceedings
Item 2. Changes In Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES 7
</TABLE>
<PAGE> 3
--------------------------
SYMS CORP AND SUBSIDIARIES
--------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 1, MARCH 2, MAY 27,
1996 1996 1995
----------- -------- -----------
(UNAUDITED) (NOTE) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 10,496 $ 4,804 $ 2,332
Merchandise inventories 124,485 112,954 120,306
Deferred income taxes 5,860 5,221 1,316
Prepaid expenses and other current assets 4,398 3,521 4,291
-------- -------- --------
TOTAL CURRENT ASSETS 145,239 126,500 128,245
PROPERTY AND EQUIPMENT - Net of accumulated
depreciation and amortization 129,682 129,235 132,432
DEFERRED INCOME TAXES 697 -- 111
OTHER ASSETS 4,581 4,409 4,056
-------- -------- --------
TOTAL ASSETS $280,199 $260,144 $264,844
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 45,017 $ 30,900 $ 43,099
Accrued expenses 11,009 9,918 12,853
Obligations to customers 4,374 4,490 4,055
Income taxes payable 6,211 5,331 979
Short term borrowings -- -- 4,000
Current portion of obligations under capital lease 355 340 299
-------- -------- --------
TOTAL CURRENT LIABILITIES 66,966 50,979 65,285
-------- -------- --------
OBLIGATIONS UNDER CAPITAL LEASE 1,210 1,304 1,565
-------- -------- --------
DEFERRED INCOME TAXES 842 255 --
-------- -------- --------
OTHER LONG TERM LIABILITIES 431 237 --
-------- -------- --------
COMMITMENTS
SHAREHOLDERS' EQUITY
Common stock, par value $0.05 per share. Authorized 30,000
shares; 17,694 outstanding as of June 1, 1996, March 2,
1996 and May 27, 1995 885 885 885
Preferred stock, par value $100 per share. Authorized 1,000
shares; none outstanding -- -- --
Additional paid-in capital 11,709 11,709 11,709
Retained earnings 198,156 194,775 185,400
-------- -------- --------
TOTAL SHAREHOLDERS' EQUITY 210,750 207,369 197,994
-------- -------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $280,199 $260,144 $264,844
======== ======== ========
</TABLE>
NOTE: The balance sheet at March 2, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to condensed consolidated financial statements
1
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--------------------------
SYMS CORP AND SUBSIDIARIES
--------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
-------------------------
JUNE 1, MAY 27,
1996 1995
-------- -------
(UNAUDITED)
<S> <C> <C>
Net sales $ 83,377 $79,252
Cost of goods sold 52,921 52,078
-------- -------
Gross profit 30,456 27,174
Expenses:
Selling, general and administrative 17,024 17,300
Advertising 2,409 1,770
Occupancy 3,175 3,082
Depreciation and amortization 1,881 1,940
Provision for special charges -- 1,200
-------- -------
Income from operations 5,967 1,882
Interest (income) expense - net (17) 126
-------- -------
Income before income taxes 5,984 1,756
Provision for income taxes 2,603 720
-------- -------
Net income $ 3,381 $ 1,036
======== =======
Net income per share $ 0.19 $ 0.06
======== =======
Weighted average shares outstanding 17,694 17,694
======== =======
</TABLE>
See notes to condensed consolidated financial statements
2
<PAGE> 5
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SYMS CORP AND SUBSIDIARIES
--------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
----------------------
JUNE 1, MAY 27,
1996 1995
-------- --------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,381 $ 1,036
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization 1,881 1,940
Deferred income taxes (252) --
(Gain) on sale of property and equipment (25) (65)
Loss on disposal of assets 244 --
Changes in operating assets and liabilities:
(Increase) in merchandising inventories (11,531) (10,046)
(Increase) decrease in prepaid expenses and other
current assets (877) 1,388
(Increase) decrease in other assets (172) 79
Increase in accounts payable 14,117 7,478
Increase in accrued expenses 1,091 4,138
(Decrease) in obligations to customers (116) (706)
Increase in other long term liabilities 194 --
Increase (decrease) in income taxes 384 (4,597)
-------- --------
Net cash provided by operating activities 8,319 645
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property and equipment (2,579) (719)
Proceeds from sale of property and equipment 31 66
-------- --------
Net cash (used in) investing activities (2,548) (653)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of obligations under capital lease (79) (67)
Revolving line of credit borrowings - net -- 1,950
-------- --------
Net cash (used in) provided by financing activities (79) 1,883
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 5,692 1,875
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,804 457
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 10,496 $ 2,332
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $ 23 $ 107
======== ========
Income taxes paid (refunds received) - net $ 2,476 $ 5,318
======== ========
</TABLE>
See notes to condensed consolidated financial statements
3
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SYMS CORP AND SUBSIDIARIES
--------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THIRTEEN WEEKS ENDED JUNE 1, 1996 AND MAY 27, 1995
- --------------------------------------------------------------------------------
(UNAUDITED)
.
NOTE 1 - THE COMPANY
Syms Corp (the "Company") operates a chain of forty "off-price" retail stores
(thirty-eight at March 2, 1996) located throughout the Northeastern and Middle
Atlantic regions and in the Midwest, Southeast and Southwest. Each Syms store
offers a broad range of first quality, in season merchandise bearing nationally
recognized designer or brand-name labels for men, women and children.
NOTE 2 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the thirteen week period ended June 1, 1996
is not necessarily indicative of the results that may be expected for the entire
fiscal year ending March 1, 1997. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the fiscal year ended March 2, 1996.
NOTE 3 - ACCOUNTING PERIOD
The Company changed its fiscal year end to the Saturday nearest to the end of
February. This change was reported on March 17, 1995. The fiscal year ending
March 1, 1997 will be comprised of 52 weeks. The fiscal year ended March 2, 1996
was comprised of 53 weeks.
NOTE 4 - MERCHANDISE INVENTORIES
Merchandise inventories are stated at the lower of cost (first in, first out) or
market, as determined by the retail inventory method.
NOTE 5 - BANK CREDIT FACILITIES
The Company has an unsecured revolving credit agreement with a bank for a line
of credit not to exceed $40,000,000 through December 1, 1997. Interest on
individual advances is payable quarterly at 1 1/2% per annum below the bank's
base rate, except that at the time of advance, the Company has the option to
select an interest rate based upon one of two other alternative calculations,
with such rate to be fixed for a period not to exceed 90 days. The interest rate
on short term borrowings was 6.75% at June 1, 1996. The average daily unused
portion is subject to a commitment fee of 1/8 of 1% per annum. As of June 1,
1996 and March 2, 1996 there were no outstanding borrowings under this
agreement. At May 27, 1995 there was $4,000,000 in outstanding borrowings.
The agreement contains financial covenants, with respect to consolidated
tangible net worth, as defined, working capital and maximum capital
expenditures, including dividends, as well as other financial ratios.
In addition, the Company has a separate $10,000,000 credit facility with another
bank available for the issuance of letters of credit for the purchase of
merchandise. This agreement may be cancelled at any time by either party. At
June 1, 1996, March 2, 1996 and May 27, 1995 the Company had $3,879,000,
$3,786,000 and $5,801,000, respectively, in outstanding letters of credit.
NOTE 6 - PROVISION FOR SPECIAL CHARGES
The provision for special charges for the thirteen week period ended May 27,
1995 in the amount of $1,200,000 was for costs associated with closing the store
in Sterling Heights, Michigan.
4
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SYMS CORP AND SUBSIDIARIES
--------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
Thirteen Weeks Ended June 1, 1996 Compared to Thirteen Weeks Ended May 27, 1995
Net sales of $83,377,000 for the thirteen weeks ended June 1, 1996 increased
$4,125,000 (5.2%) as compared to net sales of $79,252,000 for the thirteen weeks
ended May 27, 1995. Three new stores (Sharonville, Pittsburgh and an additional
Secaucus store) were included in the first quarter ended June 1, 1996.
Comparable store sales increased 4.3% from the 1995 period. The 5.2% increase
was for the most part, the result of an increase in average unit selling prices
and an increase in the number of stores as compared to last year.
Gross profit for the thirteen weeks ended June 1, 1996 was $30,456,000, an
increase of $3,282,000 (12.1%) as compared to $27,174,000 for the fiscal period
ended May 27, 1995. This increase resulted mainly from increased net sales of
$4,125,000 and the Company's gross margin increasing to 36.5% from 34.3%. The
2.2% improvement in gross margin resulted primarily from increased levels of
opportunistic and in-season purchases which created better values for the
Company's customers and lower markdowns.
Selling, general and administrative expense decreased $276,000 to $17,024,000
(20.4% as a percentage of net sales) for the thirteen weeks ended June 1, 1996
as compared to $17,300,000 (21.8% as a percentage of net sales) for the thirteen
weeks ended May 27, 1995. This decrease resulted for the most part from the
continuing effort on the part of Company management to reduce expenses.
Advertising expense for the thirteen weeks ended June 1, 1996 increased to
$2,409,000, as compared to $1,770,000 in the thirteen week period ended May 27,
1995 resulting from a return to TV, a commitment to expand the Company's
advertising effort and an increase of TV in single store markets.
Occupancy costs were $3,175,000 (3.8% as a percentage of net sales) for the
thirteen week period ended June 1, 1996, substantially unchanged from $3,082,000
(3.9% as a percentage of net sales) for the period ended May 27, 1995.
Depreciation and amortization amounted to $1,881,000, a decrease of $59,000 as
compared to $1,940,000 for the thirteen weeks ended May 27, 1995 due primarily
to certain assets becoming fully depreciated during this period, and the
elimination of depreciable assets resulting from the closing of the Hoffman
Estates (March 1995) and Sterling Heights (July 1995) stores.
The provision for special charges for the thirteen week period ended May 27,
1995 in the amount of $1,200,000 was for costs associated with closing the store
in Sterling Heights, Michigan.
Income before income taxes for the thirteen weeks ended June 1, 1996 of
$5,984,000 materially increased $4,228,000 (more than tripled) as compared to
$1,756,000 for the thirteen weeks ended May 27, 1995. As discussed above the
increase in income before income taxes reflects for the most part higher gross
profit, offset somewhat by increased selling, general and administrative and
advertising expense, and no special charges in the current period.
For the thirteen week period ended June 1, 1996 the effective income tax rate
was 43.5% as compared to 41.0% last year. Last year's rate was favorably
impacted by the recognition of certain tax reserves provided for previous years
that were no longer deemed necessary.
5
<PAGE> 8
--------------------------
SYMS CORP AND SUBSIDIARIES
--------------------------
LIQUIDITY AND CAPITAL RESOURCES
Working capital at June 1, 1996 was $78,273,000, an increase of $15,313,000 from
$62,960,000 as of May 27, 1995, and the ratio of current assets to current
liabilities improved to 2.17 to 1 as compared to 1.96 to 1 at May 27, 1995.
Net cash provided by operating activities totaled $8,319,000 for the thirteen
weeks ended June 1, 1996 an increase of $7,674,000 as compared to $645,000 for
the thirteen weeks ended May 27, 1995. Net income for 1996 amounted to
$3,381,000 compared to $1,036,000 in 1995, an increase of $2,345,000. In the
thirteen week period ended June 1, 1996, cash provided from operating activities
was mainly used to increase inventory by $11,531,000, offset by an increase in
accounts payable of $14,117,000.
Net cash used in investing activities was $2,548,000 for the thirteen weeks
ended June 1, 1996. Net cash used in investing activities was $653,000 in 1995.
Expenditures for property and equipment totaled $2,579,000 and $719,000 for the
thirteen weeks ended June 1, 1996 and May 27, 1995, respectively.
Net cash used in financing activities was $79,000 for the thirteen weeks ended
June 1, 1996. Net cash provided by financing activities was $1,883,000 in 1995
arising from an increase in revolving line of credit borrowings amounting to
$1,950,000. As of May 27, 1995, the Company had net borrowings of $4,000,000
under its revolving credit agreement.
The Company has a revolving credit agreement with a bank for a line of credit
not to exceed $40,000,000 through December 1, 1997. At December 1, 1997 the
Company has the option to reduce this commitment to zero or convert the
revolving credit agreement to a term loan with a maturity date of December 1,
2000. Except for funds provided from this credit agreement, the Company has
satisfied its operating and capital expenditure requirements, including those
for the opening and expansion of stores, from internally generated funds. For
the thirteen weeks ended June 1, 1996 there were no borrowings under the
revolving credit agreement. For the thirteen weeks ended May 27, 1995 the
average amount of borrowings under the revolving credit agreement was $2,288,000
with a weighted average interest rate of 7.5%.
The Company has planned capital expenditures of approximately $16,500,000 for
the fiscal year ending March 1, 1997, which includes plans to open two new
stores, to expand the Secaucus distribution center and to relocate one store
from a leased location to a Company built store. Through the thirteen week
period ended June 1, 1996 the Company has incurred $2,579,000 of capital
expenditures relating to the $16,500,000.
Management believes that existing cash, internally generated funds, trade credit
and funds available from the revolving credit agreement will be sufficient for
working capital and capital expenditure requirements for the fiscal year ending
March 1, 1997.
IMPACT OF INFLATION AND CHANGING PRICES
Although the Company cannot accurately determine the precise effect of inflation
on its operations, it does not believe inflation has had a material effect on
sales or results of operations.
6
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--------------------------
SYMS CORP AND SUBSIDIARIES
--------------------------
PART II. OTHER INFORMATION
- --------------------------------------------------------------------------------
Item 1. LEGAL PROCEEDINGS - None
Item 2. CHANGES IN SECURITIES - None
Item 3. DEFAULTS UPON SENIOR SECURITIES - None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None
Item 5. OTHER INFORMATION - None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K - During the quarter ended June 1, 1996 no
reports on Form 8-K were filed.
(c) By-laws of Syms Corp, as amended.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYMS CORP
DATE: JULY 3, 1996 BY SY SYMS
--------------------------------------------
SY SYMS
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
BY JOHN K. KABAY
--------------------------------------------
JOHN K. KABAY
VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND TREASURER
(Principal Financial and Accounting Officer)
7
<PAGE> 10
EXHIBIT INDEX
-------------
Exhibit
No. Description
------- -----------
Ex-27 Financial Data Schedule
Ex-99(c) By-laws of Syms Corp. as amended.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-01-1997
<PERIOD-END> JUN-01-1996
<CASH> 10,496
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 124,485
<CURRENT-ASSETS> 145,239
<PP&E> 195,618
<DEPRECIATION> 65,936
<TOTAL-ASSETS> 280,199
<CURRENT-LIABILITIES> 66,966
<BONDS> 1,210
0
0
<COMMON> 885
<OTHER-SE> 209,865
<TOTAL-LIABILITY-AND-EQUITY> 280,199
<SALES> 83,377
<TOTAL-REVENUES> 83,377
<CGS> 52,921
<TOTAL-COSTS> 52,921
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 115
<INCOME-PRETAX> 5,984
<INCOME-TAX> 2,603
<INCOME-CONTINUING> 3,381
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,381
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.19
</TABLE>
<PAGE> 1
BY-LAWS
OF
SYMS CORP.
----------
ARTICLE I
OFFICES
Section 1. The registered office shall be located in Trenton, New
Jersey.
Section 2. The Corporation may also have offices at such other places
both within and without the State of New Jersey as the Board of Directors may
from time to time determine or the business of the Corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of directors
shall be held in the Town of Lyndhurst, State of New Jersey, or at such other
place within or without the State of New Jersey as may be fixed from time to
time by the Board of Directors.
Section 2. Annual meetings of shareholders, commencing with the year
1984, shall be held on the second Tuesday in May, if not a legal holiday, and if
a legal holiday, then on the next secular day following, at 10:00 A.M., or at
such other date and time as shall be fixed from time to time by the Board of
<PAGE> 2
Directors and stated in the notice of meeting, at which the shareholders shall
elect by a plurality vote a Board of Directors, and transact such other business
as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the time,
place, and purpose or purposes of the meeting shall be delivered not less than
ten nor more than sixty days before the date of the meeting, either personally
or by mail, to each shareholder of record entitled to vote at such meeting.
ARTICLE III
SPECIAL MEETING OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other than
the election of directors may be held at such time and place within or without
the State of New Jersey as shall be stated in the notice of the meeting or in a
duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the President, the Board of Directors, or the
holders of not less than fifty percent of all the shares entitled to vote at the
meeting. Special meetings of the shareholders may be called also by the Chairman
of the Board of Directors.
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<PAGE> 3
Section 3. Written notice of a special meeting stating the time,
place, and purpose or purposes of the meeting for which the meeting is called,
shall be delivered not less than ten nor more than sixty days before the date of
the meeting, either personally or by mail, by or at the direction of the
President, the Secretary, or the officer or persons calling the meeting, to each
shareholder of record entitled to vote at such meeting.
Section 4. Business transacted at any special meeting shall be
confined to the purpose or purposes stated in the notice thereof.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the Certificate of
Incorporation. If however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as originally notified.
-3-
<PAGE> 4
Section 2. If a quorum is present, the affirmative vote of a majority
of the shares of stock represented at the meeting shall be the act of the
shareholders unless the vote of a greater number of shares of stock is required
by law or the Certificate of Incorporation.
Section 3. Each outstanding share of stock, having voting power, shall
be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders, unless otherwise provided in the Certificate of Incorporation. A
shareholder may vote either in person or by proxy executed in writing by the
shareholder or by his agent.
In all elections for directors every shareholder, entitled to vote,
shall have the right to vote, in person or by proxy, the number of shares of
stock owned by him, for as many persons as there are directors to be elected and
for whose election he has a right to vote, or, if the Certificate of
Incorporation so provides, to cumulate the vote of said shares, and give one
candidate as many votes as the number of directors multiplied by the aggregate
number of his votes shall equal, or to distribute the votes on the same
principle among as many candidates as he may see fit.
-4-
<PAGE> 5
Section 4. Subject to statutory provisions, any action required to be
taken at a meeting of the shareholders may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the shareholders entitled to vote with respect to the subject matter thereof.
Except as provided in the Certificate of Incorporation and subject to
the statutory provisions and upon compliance therewith any action required to be
taken at a meeting of shareholders, other than the annual election of directors,
may be taken without a meeting upon the written consent of shareholders who
would have been entitled to cast the minimum number of votes which would be
necessary to authorize such action at a meeting at which all shareholders
entitled to vote thereon were present and voting.
ARTICLE V
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board of directors, other than the first Board of Directors, shall be not less
than three nor more than eight. The exact number of directors within such
maximum and minimum shall be determined by resolution of the Board of Directors
or by the shareholders at an annual meeting or special meeting, except as
otherwise provided in the Certificate of Incorporation. Directors need not be
residents of the State of New Jersey nor shareholders of the Corporation. The
directors,
-5-
<PAGE> 6
other than the first Board of Directors, shall be elected at the annual meeting
of the shareholders, and each director elected shall serve until the next
succeeding annual meeting and until his successor shall have been elected and
qualified. The first Board of Directors shall hold office until the first annual
meeting of shareholders.
Section 2. Unless otherwise provided in the Certificate of
Incorporation, any vacancy occurring in the Board of Directors, and any
directorship to be filled by reason of an increase in the number of directors
constituting the whole Board of Directors, may be filled by the affirmative
vote of a majority of the remaining directors though less than a quorum of the
Board of Directors. Any director elected to fill a vacancy shall be elected for
the unexpired portion of the term of his predecessor in office.
Any directorship to be filled by reason of an increase in the number
of directors shall be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose. A director elected to fill a
newly created directorship shall serve until the next succeeding annual meeting
of shareholders and until his successor shall have been elected and qualified.
Section 3. The business affairs of the Corporation shall be managed by
its Board of Directors which may exercise all such powers of the Corporation and
do all such lawful acts and
-6-
<PAGE> 7
things as are not by statute or by the Certificate of Incorporation or by these
By-Laws directed or required to be exercised or done by the shareholders.
Section 4. The directors may keep the books and records of the
Corporation, except such as are required by law to be kept within the state,
outside of the State of New Jersey, at such place or places as they may from
time to time determine.
Section 5. The Board of Directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for services to the Corporation as directors,
officers or otherwise.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the Board of Directors, regular or special, may
be held either within or without the State of New Jersey.
Section 2. The first meeting of each newly elected Board of Directors
shall be held at such time and place as shall be fixed by the vote of the
shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting,
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provided a quorum shall be present, or it may convene at such place and time as
shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the Board of Directors may be held upon
such notice, or without notice, and at such time and at such place as shall from
time to time be determined by the Board.
Section 4. Special meetings of the Board of Directors may be called by
the President on two days' notice to each director, either personally or by mail
or by telegram; special meetings shall be called by the President or Secretary
in like manner and on like notice on the written request of two directors.
Notice need not be given to any director who signs a waiver of notice, whether
before or after the meeting.
Section 5. Attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless a greater or lesser number is required by
statute or by the
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Certificate of Incorporation. The act of a majority of the directors present at
any meeting at which a quorum is present shall be the act of the Board of
Directors, unless the act of a greater or lesser number is required by statute
or by the Certificate of Incorporation. If a quorum shall not be present at any
meeting of directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present.
Section 7, Unless otherwise provided by the Certificate of
Incorporation, any action required to be taken at a meeting of the Board, or any
committee thereof, shall be deemed the action of the Board of Directors or of a
committee thereof, if all directors or committee members, as the case may be,
execute either before or after the action is taken, a written consent thereto,
and the consent is filed with the records of the Corporation.
ARTICLE VII
COMMITTEES
Section 1. The Board of Directors, by resolution adopted by a majority
of the number of directors fixed by the By-Laws or otherwise, may designate one
or more directors to constitute an executive committee and one or more other
committees, each of which committees, to the extent provided in such resolution
shall have and exercise all of the authority of the Board of Directors in the
management of the Corporation, to
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the extent permissible by law. Vacancies in the membership of any committee
shall be filled by the Board of Directors at a regular or special meeting of the
Board of Directors. Each such committee shall keep regular minutes of its
proceedings and report the same to the Board when required.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
Certificate of Incorporation or of these By-Laws, notice is required to be
given to any director or shareholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or shareholder, at his address as it appears on the records of the
corporation with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given under
the provisions of the statutes or under the provisions of the Certificate of
Incorporation or these By-Laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
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ARTICLE IX
OFFICERS
Section 1. The officers of the Corporation shall be chosen by the
Board of Directors and shall be a Chairman of the Board, a President, a
Vice-President, a Secretary and a Treasurer. The Board of Directors may also
choose additional vice-presidents, and one or more assistant secretaries and
assistant treasurers.
Section 2. The Board of Directors at its first meeting after each
annual meeting of shareholders shall choose a President, one or more
Vice-President, a Secretary and a Treasurer, none of whom need be a member of
the Board.
Section 3. The Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors.
Section 4. The salaries of all officers and agents of the Corporation
shall be fixed by the Board of Directors.
Section 5. The officers of the Corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
Board of Directors may be
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removed at any time by the affirmative vote of a majority of the Board of
Directors. Any vacancy occurring in any office of the Corporation shall be
filled by the Board of Directors.
THE CHAIRMAN OF THE BOARD
Section 6. The Chairman of the Board shall be the chief executive
officer and the chief operating officer of the Corporation, shall preside at all
meetings of the shareholders and the Board of Directors, shall have general and
active management of the business of the Corporation and shall see that all
orders and resolutions of the Board of Directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation.
THE PRESIDENT
The President shall assist the Chairman of the Board in the general
and active management of the business of the Corporation and shall see that all
orders and resolutions of the Board are carried into effect, subject, however,
to the right of the directors to delegate any specific powers, except such as
may be
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by statute exclusively conferred on the President, to any other officer or
officers of the Corporation. The President shall be EX-OFFICIO a member of all
committees.
THE VICE-PRESIDENTS
Section 8. The Vice-President, or if there shall be more than one, the
Vice-Presidents in the order determined by the Board of Directors, shall, in the
absence or disability of the Chairman of the Board and the President, perform
the duties and exercise the powers of the Chairman of the Board and the
President and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the shareholders and record all the proceedings of
the meetings of the Corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all Meetings of
the shareholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or the
Chairman of the Board, under whose supervision he shall be. He shall have
custody of the corporate seal of the Corporation and he, or an assistant
secretary, shall have authority to affix the same to any instrument requiring it
and when so affixed, it may be
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attested by his signature or by the signature of such assistant secretary. The
Board of Directors may give general authority to any other officer to affix the
seal of the Corporation and to attest the affixing by his signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the Board of Directors, shall,
in the absence or disability of the Secretary, perform the duties and exercise
the powers of the Secretary and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The Treasurer shall have custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors.
Section 12. He shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and Board of Directors, at its
regular meetings, or when the Board of Directors so requires, an account of all
his transactions as Treasurer and of the financial condition of the Corporation.
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Section 13. if required by the Board of Directors, he shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, or, if there shall be more than
one, the assistant treasurers in the order determined by the Board of Directors,
shall, in the absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer and shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
ARTICLE X
INDEMNIFICATION
The Corporation shall, to the fullest extent permitted by Section
14A:3-5 of the Business Corporation Act of New Jersey, as the same may be
amended and supplemented, indemnify any and all persons who it shall have power
to indemnify under said Section from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said Section.
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ARTICLE XI
CERTIFICATES FOR SHARES
Section 1. The shares of the Corporation shall be represented by
certificates signed by, the Chairman or Vice-Chairman of the Board, or the
President or a Vice-President and by the Treasurer or an assistant treasurer, or
the Secretary or an assistant secretary of the Corporation, and may be sealed
with the seal of the Corporation or a facsimile thereof.
When the Corporation is authorized to issue shares of more than one
class there shall be set forth upon the face or back of the certificate, or the
certificate shall have a statement that the Corporation will furnish to any
shareholder upon request and without charge, a full statement of the
designations, preferences, limitations and relative rights of the shares of each
class authorized to be issued and, if the Corporation is authorized to issue any
preferred or special class in series, the variations in the relative rights and
preferences between the shares of each such series so far as the same have been
fixed and determined and the authority of the Board of Directors to fix and
determine the relative rights and preferences of subsequent series.
Section 2. The signatures of the officers of the Corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the Corporation itself or an
employee
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of the Corporation. In case any officer who has signed or whose facsimile
signature has been placed upon such certificate is issued, it may be issued by
the Corporation with the same effect as if he were such officer at the date of
its issue.
LOST CERTIFICATES
Section 3. The Board of Directors may direct a new certificate to be
issued in place of any certificate theretofore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the Board of Directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as it
deems expedient, and may require such indemnities as it deems adequate, to
protect the Corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the Corporation or the transfer agent of
the Corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate cancelled and the transaction recorded upon the books of the
Corporation.
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CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders or any adjournment thereof
or entitled to receive payment of any dividend or allotment of any right, or
entitled to give a written consent to any action without a meeting, or in order
to make a determination of shareholders for any other proper purpose, the Board
of Directors may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, sixty days. If the stock transfer
books shall be closed for the purpose of determining shareholders entitled to
notice of or to vote at a meeting of shareholders, such books shall be closed
for at least ten days immediately preceding such meeting. If the stock transfer
book shall be closed for the purpose of determining shareholders entitled to
give a written consent to any action without a meeting, such books may not be
closed for more than sixty days before the date fixed for tabulation of consents
or if no date has been fixed for tabulation, the books may not be closed for
more than sixty days before the last day on which consents received may be
counted. In lieu of closing the stock transfer books, the Board of Directors may
fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than sixty days and, in case
of a meeting of shareholders, not less than ten days prior to the date on which
the particular action, requiring such determination of shareholders, is to be
taken and, in case
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of determining shareholders entitled to give a written consent the record date
may not be more than sixty days before the date fixed for tabulation of the
consents or if no date has been fixed for the tabulation, more than sixty days
before the last day on which consents may be counted. If the stock transfer
books are not closed and no record date is fixed, the record date for a
shareholders' meeting shall be the close of business on the date next preceding
the day on which notice is given, or, if no notice is given, the day next
preceding the day on which the meeting is held; and the record date for
determining shareholders for any other purpose shall be at the close of business
on the day on which the resolution of the board relating thereto is adopted.
When a determination of shareholders of record for a shareholders' meeting has
been made as provided in this section, such determination shall apply to any
adjournment thereof unless the Board fixes a new record date for the adjournment
meeting.
REGISTERED SHAREHOLDERS
Section 6. The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of New
Jersey.
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LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books
for shares shall make, and certify a complete list of the shareholders entitled
to vote at a shareholders' meeting, or adjournment thereof, arranged in
alphabetical order within each class, series, or group of shareholders
maintained by the Corporation for convenience of reference, with the address of,
and the number of shares held by each shareholder, which list shall be produced
and kept open at the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the meeting. Such list
shall be prima facie evidence as to who are the shareholders entitled to
examine such list or to vote at any meeting of the shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the Certificate of
Incorporation relating thereto, if any, dividends may be declared by the Board
of Directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in its bonds, in its own shares or other property including
the shares or bonds of other corporations subject to any provisions of law and
of the Certificate of Incorporation.
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Section 2. Before payment of any dividend, there may be set aside out
of any funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the directors shall think conducive to the interest of the
Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECK
Section 3. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the Corporation shall be fixed by
resolution of the Board of Directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal, New
Jersey". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
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ARTICLE XII
AMENDMENTS
Section 1. These By-Laws may be altered, amended, or repealed or new
By-laws may be adopted by the affirmative vote of a majority of the Board of
Directors at any regular or special meeting of the Board, subject to any
provision in the Certificate of Incorporation reserving to the shareholders the
power to adopt, amend, or repeal By-Laws, but By-Laws made by the Board may be
altered or repealed and new By-Laws made by the shareholders. The shareholders
may prescribe that any By-Law made by them shall not be altered or repealed by
the Board.
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